IRS Using Private Debt Collection Agencies

In 2015, President Obama signed into law the Fixing America’s Surface Transportation Act, known as the FAST Act. It provides long-term funding for transportation projects. Buried in the bill is a requirement that the IRS must use private debt collection companies.

Starting in 2016, the IRS is required to use private debt collection companies to collect “inactive tax receivables” (i.e., any outstanding assessment that the IRS includes in potentially collectible inventory). Traditionally, this debt has been hard to collect tax.

IRS Collections Program: When the IRS first began using private tax collectors, it assured taxpayers that they would know they are in the program before being contacted by a private collection agency. This way, taxpayers could be wary of any bill collectors who claim to be working on behalf of the IRS.

Contact By Letter: Private tax collectors will usually contact a taxpayer by letter. If the taxpayer’s last known address is incorrect, the private collector searches for the correct address. Next, the private collector will telephone the taxpayer to request full payment.

Payment Directly to the IRS: If the taxpayer cannot pay in full right away, the private collector offers an installment deal for up to five years. Please note, private collectors cannot accept payments. Do not pay them directly! All checks will still be made payable to the U.S. Treasury—not to an individual or firm. The collection agency will provide the appropriate IRS mailing address for payments. The collection agencies will never request that cash or checks be sent to individuals.

There is some speculation that this requirement may result in additional attempts by fraudsters to collect payments. If you receive a letter or phone call, please do not hesitate to contact Green FS immediately so that we can help you determine if this is a legitimate debt collection.

5 Steps To Avoiding IRS Notices

Getting a letter or notice from the IRS can be upsetting, confusing, and unnecessary. The IRS sends taxpayers notices to request payment for taxes, to notify them of a change to their account, or to request additional information. Attention to the following details will reduce the likelihood that you will become pen pals with the IRS.


1. Always address what a payment is for when submitting to the IRS. 

If your payment is not tagged correctly, the IRS may apply it in any manner they want. = All payments should include:

  • Your name
  • Your taxpayer identification number – SSN if  paying for individual
  • The type of tax you are paying
  • The period the tax payment is for


2. Make sure that the name and social security number on your tax return matches the Social Security Administration’s records.

If you change your surname, notify the Social Security Administration and request a new social security card.


3. Don’t claim a tax exemption for your any children unless you are allowed to do so.

Special rules apply to divorced parents. If both parents claim the child as a dependent, both returns will be subject to further IRS review.


4. Always respond quickly to any IRS notice, even if you think it is outdated or incorrect.

If the IRS doesn’t hear from you within the time specified on their notice, you may lose the right to protest any changes made to your return.


5. Send a change of address form (Form 8822) to the IRS when your address changes.

If you fail to provide the IRS with your current mailing address, you may not receive a refund check or a notice if there are problems or adjustments to your return. And even if the IRS can’t find you, penalties and interest will continue to accumulate on any tax due.


For assistance with any tax concern you have, give us a call.

Have Tax Debt? Use the Offer In Compromise Pre-qualification Tool

An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can’t pay your full tax liability. The IRS Offer In Compromise pre-qualifier tool can help you understand if you qualify and Green Financial Services can assist with the filing. Call us to find out more about this tool and how to file.

Se Hable Espanol at GFS!

Se habla espanolAt Green Financial Services, “Se Habla Espanol” so we can help you our your family members with finance needs but also do it in a language that is potentially more comfortable and understandable to you.

The IRS also provides YouTube videos in sign language and other communication methods, including Spanish, to help users.